Short Let Deregulation (London)

Andy Slaughter Excerpts

Wednesday 7th January 2015 Westminster Hall

[Ms Karen Buck (Westminster North) (Lab)]

I am extremely grateful for the opportunity at the 11th hour to explain to the Minister the concerns that I am picking up from constituents, residents, community associations and local authorities about the impact, particularly in inner London, of the proposals to deregulate further the rules on short-term lettings.

Residents in my local communities that are particularly affected—in areas where there is already a substantial proportion of private rented accommodation that is very much at the front of this kind of problem—are already under a number of pressures; I will develop that point later on in my speech. They are very anxious about how much that will be extended with further deregulation. I believe that measures can still be taken that can offset those problems for my local residents.

The Government’s logic in extending deregulation is that home owners should be free to take decisions about what they do with their own homes, within some continuing limitations. Of course, no one wants to put in place petty, bureaucratic restrictions. If a home owner wants, for example, to do a home swap when they go on holiday for two or three weeks, or to take advantage of their absence to let their home out for a week or two, they should not be subject to severe restrictions and enforcement action. However, what local authorities will say—particularly the central London authorities—is that they do not seek to enforce against that kind of casual and holiday use, but they do seek to use the existing law to enforce against the significant and growing problem of abuse of short-term lets. What seems reasonable when viewed as cutting red tape for the individual can feel very different when it is scaled up and applied to the residential economy of central London neighbourhoods. That is certainly the conclusion of the residents and amenity societies in Westminster.

Even before the deregulation, those neighbourhoods have been facing this pressure, and local authorities have been feeling the cost of enforcement, as residential neighbourhoods increasingly resemble an extension of the hospitality industry. That can be confirmed by spending a minute or two on home-letting websites such as Airbnb. The simple fact is that there is a strong economic incentive for inner London property owners in particular to turn over their properties to commercial use. Data collected by Westminster council a few months ago demonstrated that hospitality rents are far higher than those that apply to longer-term residential properties. It found that a one-bedroom flat would earn almost £800 a week in the short-term let industry, compared with £440 on average for a longer tenancy—and prices are rising proportionally.

[Mr Andy Slaughter (Hammersmith) (Lab)]

I am pleased that my hon. Friend has secured this debate. She mentioned Airbnb, one of the more aggressive marketers. Not a day goes by without constituents writing to me having been asked by this organisation to give their flat or house over. They are worried because they feel that residential areas are effectively turning into hotels, and as a consequence, there are fewer properties in an area where there is already great pressure, and there is also a lot of disruption to their lives.

--- Later in debate ---

[Mr Slaughter]

I am most grateful to my hon. Friend for giving way again; she is very generous. She has identified clearly the problem. It is with mansion flat blocks, and her constituency has even more of those than mine does. Many long-term residents, a lot of whom are now elderly, simply want the quiet enjoyment of their own home, but find themselves living in a highly disruptive atmosphere, often with groups of young people who do not take care of the property because they are there for days or weeks at a time and who are making their lives a misery.

[Ms Buck]

My hon. Friend is absolutely right. This is a common theme. This often, but not exclusively, affects older residents, who describe their experience as one of being completely stranded in what used to be a neighbourly block, where they knew people, felt a sense of security and had the quiet enjoyment of their homes. Now, they find the constant movement of people in and out very bewildering and alienating, and find that it causes or is linked to a number of practical problems.

Another resident wrote to me to say that

“this will increase problems related to noise and nuisance for Westminster residents from the short-let tenants. It’s already happening within my own apartment block, and I’ve had to complain to Westminster Council 24-hour noise hotline due to loud parties and excessive noise every week from short-let tenants in my block. This is making me want to sell my home and move to a safer, quieter neighbourhood outside of Westminster.”

Of course, none of this means that all visitors cause problems or that all landlords, whether professional or casual, are careless of the consequences of their letting. That is far from the case. It is the cumulative impact and the nature of the high turnover in the visitor and tourist economy that is often the problem; it is not the behaviour of any single person or group of people. These blocks of flats—the properties are largely flats—were not designed to be part of the hospitality economy; they were designed to be part of a residential community, and they have changed.

In addition to the impact on residents and neighbours, Westminster council—I am sure that this is also true of other local authorities—is investigating some 1,600 properties for violations of the short-term-let rules with a staff of four, at a time of massive reductions in funding and staffing. Some councillors are having to use ward budgets for this purpose—I do not think that is what ward budgets were intended for—as complaints have risen. There have been 360 complaints in the last 12 months.

If resources were going on enforcement action against the home owners renting out their home for a few weeks while they are away—against the very people whom the Government claim the deregulation is aimed at helping and relieving the pressure on—money could be saved, but of course that is not the case. Enforcement action is aimed at the de facto commercial landlord, and the new deregulated environment will make that harder and costlier to pursue, with a requirement to meet a higher burden of proof. The reality is that a bigger burden will fall on councils that are increasingly ill equipped to deal with it.

The Government seem to accept the need to limit the extent to which professional landlords can take advantage of the opportunities offered by higher incomes from inner-London lettings; otherwise, presumably, they would abandon all restrictions, rather than simply change the limit to permit 90-day letting under the Deregulation Bill. Unfortunately, that is likely to work better in theory than in practice. As the Covent Garden Community Association explained to me:

“Some amateur landlords are causing just as many problems. Not only will it be very difficult to prove who is a genuine resident but short lets even by genuine residents can be very disruptive and insecure...we are hearing complaints about this sort of thing all the time now, with an estimated 200 flats in Covent Garden alone available to rent by the night on Airbnb at any one time.”

I say to the Minister that there is still an opportunity to use the Deregulation Bill to meet the legitimate and indeed cross-party concerns raised by civic and amenity societies and local authorities in central London. By amending it to give individual London boroughs the right to override any relaxation of planning requirements for short lets that the Secretary of State might introduce, and by making it clear that local authorities could restrict lettings in respect of residential properties that were not the sole or main residence of the lessor, many of the risks could be offset. The Minister should take that opportunity.

We think that it would also be useful to consider the findings of the review of property conditions in the private rented sector before proceeding. It would be useful if the Minister could provide further information on that. Finally, we expect regulations to be tabled, and they offer greater scope for local flexibility in response to what are obviously varying pressures.

However, local authorities and the communities that make up their areas need to be listened to. In the spirit of localism, to which we all pay tribute, the Government need to understand that it is local authorities that understand their communities, and this is a particularly excellent example of where decisions need to be taken closer to the ground, balancing a wish to reduce unnecessary bureaucracy against the pressing need to sustain healthy, safe and vibrant neighbourhoods, even and perhaps especially when these are on the fringes of the hospitality heart of the world’s greatest city.

--- Later in debate ---

[Brandon Lewis]

That is the point I was making. There is an uncertainty for residents if they do not know whether any given local authority would take action. If the local authority is not using that power, however, it will not miss it after the change in the legislation.

Planning legislation for the capital needs to catch up with our 21st-century way of living. Every year, thousands of visitors enjoy their holidays in Londoners’ homes. Such short-term letting already supports major events, such as tennis at Wimbledon. Our proposals will not only benefit London’s strong tourism industry by expanding the competitively priced accommodation offer; it will allow families to earn some extra income by making their home or spare room available to visitors. It offers an alternative to hotels and guest houses, so it can support the wider tourism industry. In addition, such accommodation helps those who are temporarily working in the capital or searching for a place to live by expanding the pool of competitively priced accommodation.

Residential homes provide a type of accommodation that is different from the average hotel or guest house. Renting a room in a person’s home, or renting their home while they are away, provides an opportunity to travel and live like a local, and it caters for a different type of client. Websites advertising householders’ rooms and homes indicate that a wide variety of accommodation is available in different locations, many of which are outside the central hotel zones.

[Mr Slaughter]

I do not think anybody objects to people renting out rooms in their homes. In any event, such people will not be caught at the moment. I do not think anybody objects to people renting out their property for Wimbledon or when they are away on holiday. The problem is the commercial, organised letting of large numbers of flats in single blocks, which effectively turns residential blocks into hotels or “aparthotels”. That is what we want local discretion to prevent.

[Brandon Lewis]

I suspect, therefore, that the hon. Gentleman will be pleased to support the Government’s proposals. If he looks back at my opening remarks, I think that that will deal with some of his concerns. I will go a bit further in a second.

London is a great city, as the hon. Member for Westminster North has outlined. Our proposed step forward gives Londoners the opportunity to be part of a huge industry and supplement their income. We want to be leaders, not followers, and we want to open up our great global city even further. Where other cities and countries may wish to shut down, we want to move forward.

I want to make it clear that through our reforms we want only to give London residents the freedom that is enjoyed in the rest of the country: to let out their homes on a short-term, temporary basis without the unnecessary cost and bureaucracy of applying for planning permission. We do not seek to provide new opportunities for short-term letting on a permanent or commercial basis. We fully recognise that London’s homes should not be lost to investors who will use them exclusively for short-term lets, and our reforms will not enable that. Through regulations, we want to provide certainty and consistency for residents in all London local authority areas. We want them to know when householders will be permitted temporarily to short-term let their property without the need for planning permission. The regulations we will introduce will clarify for London residents what is permissible, so they can be confident they are within the law. We will look to strike an appropriate balance between allowing freedom for occasional short-term letting by residents, as well as—this goes directly to the point made by the hon. Member for Hammersmith (Mr Slaughter)—maintaining the important provisions of the existing legislation to protect London’s housing stock.

I know there are concerns that our deregulation of section 25 could lead to a loss of permanent housing stock for Londoners at a time when London needs more new homes. However, as we seek only to allow residents to let out their homes while they are away, those properties will not be lost to the short-term rental market from London’s permanent housing stock. We will not be providing new opportunities for short-term letting on a permanent or commercial basis.